U.S.-China Trade Talks Reignite Oil Demand Optimism
Even before Israel attacked Iran, oil prices had been advancing this week, lifted by renewed optimism surrounding U.S.-China trade negotiations. Markets welcomed a more constructive tone between the two economic superpowers, with discussions in London reportedly progressing well. President Trump’s upbeat remarks added to the momentum, giving traders a reason to bet on improved global growth. As the U.S. and China represent the largest sources of oil demand globally, signs of easing tensions naturally encouraged buying across the energy complex.
A weaker U.S. dollar further supported crude prices by making oil cheaper for foreign buyers, helping push West Texas Intermediate (WTI) crude to a weekly high of $69.29—the strongest level since early April. The rally underscored how closely oil remains tied to global sentiment and economic confidence, especially in times of uncertain macro conditions.
Saudi Export Strategy Tightens Global Supply Expectations
The bullish tone was reinforced by new export guidance from Saudi Aramco. Despite OPEC+ moving forward with a modest 411,000 barrels per day increase in July output, Aramco plans to send 1 million fewer barrels to China compared to June. At the same time, rising summer demand across Gulf nations is expected to absorb much of the additional production, limiting the net impact on global supplies.
This combination of restrained exports and seasonally higher internal consumption is helping ease concerns that…
Even before Israel attacked Iran, oil prices had been advancing this week, lifted by renewed optimism surrounding U.S.-China trade negotiations. Markets welcomed a more constructive tone between the two economic superpowers, with discussions in London reportedly progressing well. President Trump’s upbeat remarks added to the momentum, giving traders a reason to bet on improved global growth. As the U.S. and China represent the largest sources of oil demand globally, signs of easing tensions naturally encouraged buying across the energy complex.
A weaker U.S. dollar further supported crude prices by making oil cheaper for foreign buyers, helping push West Texas Intermediate (WTI) crude to a weekly high of $69.29—the strongest level since early April. The rally underscored how closely oil remains tied to global sentiment and economic confidence, especially in times of uncertain macro conditions.
Saudi Export Strategy Tightens Global Supply Expectations
The bullish tone was reinforced by new export guidance from Saudi Aramco. Despite OPEC+ moving forward with a modest 411,000 barrels per day increase in July output, Aramco plans to send 1 million fewer barrels to China compared to June. At the same time, rising summer demand across Gulf nations is expected to absorb much of the additional production, limiting the net impact on global supplies.
This combination of restrained exports and seasonally higher internal consumption is helping ease concerns that the oil market might become oversupplied. Traders interpreted Saudi Arabia’s cautious approach as a signal that key producers remain committed to keeping supply balanced—especially in the face of potentially volatile global demand.
U.S. Inventory Draw Highlights Solid Refining Demand
Supportive fundamentals also came from the U.S., where commercial crude inventories fell by 3.6 million barrels last week, according to the Energy Information Administration (EIA). The draw was larger than analysts expected and coincided with a pickup in refining activity. Utilization rose to 94.3%, and net crude inputs reached the highest level since December 2019.
Gasoline and distillate inventories climbed as refineries ramped up to meet seasonal demand. The data offered a reassuring signal that fuel consumption remains robust—further reinforcing the view that the market is steadily absorbing available barrels.
Tensions in the Gulf Reinforce Supply Risk Premium
Geopolitical risks also kept crude supported through midweek. The U.S. ordered partial evacuations of diplomatic staff from Iraq and Bahrain due to heightened threats from Iran, reigniting concerns about potential supply disruptions. Tehran, accused by the U.N. nuclear watchdog of breaching non-proliferation agreements, warned it could target U.S. bases in the region if provoked. In the aftermath of Israel’s attacks on Iran, oil prices remain elevated due to these threats.
This escalation drew market attention back to the Strait of Hormuz, a narrow waterway that handles nearly 20% of global oil shipments. While no disruption has occurred yet, the new attacks have greatly increased the chance of conflict or shipping interference.
Traders Turn Cautious Ahead of U.S.-Iran Talks
Despite a strong start to the week, crude prices slipped on Thursday as traders locked in profits and adjusted positions ahead of high-stakes U.S.-Iran talks scheduled for Sunday in Oman. The early rally lost steam just below major resistance levels, and the possibility of de-escalation led some investors to pare risk exposure.
Market participants began to weigh the potential for diplomacy to ease tensions. With both sides signaling openness to dialogue, some of the immediate fear premium faded. The result was a pullback in WTI, even as the broader backdrop remained supportive.
Weekly Light Crude Oil Futures
Trend Indicator Analysis
The main trend, before the attack, was up according to the weekly swing chart. The trend changed to up last Friday when strong buying took out the swing top at $64.40. The trend will change to down if sellers take out $54.01.
The uptrend was reaffirmed this week when the market crossed to the strong side of the 52-week moving average at $67.52. The long-term range is $51.98 to $84.43. Its 50% level is $68.21. This is major resistance and a key pivot.
A sustained move over the moving average and the long-term pivot at $68.21 will indicate the buying is getting stronger. Traders are going to have to monitor these levels for the next few weeks because they could be the source of volatility. A trade through $71.17 will be further confirmation of a strong uptrend, putting $78.09 to $78.65 on the radar.
The short-term range is $71.17 to $54.01. Its pivot at $62.59 is new support.
As of Thursday’s close, the market was straddling the price cluster at $67.52 to $68.21, giving it a neutral-to-bullish tone ahead of next week.
Weekly Technical Forecast
The direction of the Weekly Light Crude Oil Futures market the week ending June 20 is likely to be determined by trader reaction to $68.21 to $67.52.
Bullish Scenario
A sustained move over $68.21 will signal the presence of buyers. If this creates enough upside momentum, we could see a near-term rally into the swing top at $71.17. Taking out this level could trigger a near-term acceleration into $78.09 to $78.65.
Bearish Scenario
A sustained move under $67.52 will indicate the return of sellers. If it generates enough downside momentum, we could see a near-term correction into $64.40, followed by $62.59.
Outlook: Geopolitics Ignite an Oil Price Rally
The oil market outlook has been turned on its head after Israel launched its attack on Iran, sending prices soaring. Prices were already supported by strong fundamentals and cautious producer behavior, with demand signals remaining firm. Refinery activity is high, inventories are drawing down, and global consumption appears steady. On the supply side, OPEC+ output increases have been limited, and Saudi Arabia’s export restraint shows that major producers are keeping a close eye on market balance.
With U.S. crude imports from Saudi Arabia dropping to zero for the first time since 2021, and recent stockpile data reflecting tighter supply conditions, the broader oil market remains well-supported. Even before the price spike, the foundation for higher prices appeared strong—built on resilient demand, measured supply growth, and ongoing geopolitical sensitivity.
Technically, look for the bullish tone to extend above $68.21, and a weaker tone to develop on a sustained move under $67.52 or the 52-week moving average.